Regional corporation tax rates – Northern Ireland

In Budget 2011, the government published a consultation paper on rebalancing the Northern Ireland economy, including looking at mechanisms for devolving the rate of corporation tax to Northern Ireland. The Chancellor has stated that to deal with the unique issues posed by the Irish Republic’s business tax regime, the consultation will consider the case for Northern Ireland having an even lower rate of corporation tax than the rest of the UK.

The Government welcomes views, in the context of this report, on devolving corporation tax rate varying powers to Northern Ireland. In particular, the Government welcomes views on the following: 

  • the importance of the headline corporation tax rate in encouraging investment;
  • the extent to which a reduction in the rate of corporation tax in Northern Ireland could support additional investment, higher growth rates and increased employment in the Northern Ireland economy;
  • the estimated costs arising from a lower corporation tax rate in Northern Ireland;
  • the dynamic impacts on tax receipts arising from a lower corporation tax rate in Northern Ireland;
  • the risks to the Northern Ireland Executive arising from a devolved corporation tax rate in Northern Ireland;
  • potential compliance costs and administrative burdens for business arising from a devolved corporation tax rate in Northern Ireland;
  • the approach that would be taken to adjust the block grant arising from a devolved corporation tax rate in Northern Ireland;
  • the balance of potential costs and benefits of a reduced corporation tax rate in Northern Ireland;
  • the merits of a deferred implementation of a rate reduction in Northern Ireland and its potential impact on investment decisions;
  • the extent to which a phased reduction in the rate of corporation tax in Northern Ireland could support a rebalancing of the economy while allowing the costs of the reduction to be more effectively managed;
  • the impact that restricting any reduction in corporation tax receipts to trading income only would have on the aim of rebalancing the Northern Ireland economy and the value for money of a corporation tax reduction;
  • whether there are other options to offset the cost to the NIE of a reduction in the rate of corporation tax that would be consistent with the overall aim of rebalancing the Northern Ireland economy;
  • the extent to which changes to R&D tax credits, annual investment allowances, training credits or a national insurance holiday could provide feasible, effective, affordable and value for money support for the rebalancing of the Northern Ireland economy.

The consultation runs from 24 March to 24 June 2011.

On devolving corporation tax to Northern Ireland responses should be sent to:

Richard Williams
Room 2/N2
HM Treasury
1 Horse Guards Road
London
SW1A 2HQ

or emailed to niconsultation@hmtreasury.gsi.gov.uk